ADVERSE SELECTION IN LIFE INSURANCE

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MOHAMMADI MAHDI

مرکز اطلاعات علمی Scientific Information Database (SID) - Trusted Source for Research and Academic Resources

Journal Paper

Paper Information

Journal: IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH) Year:2014 | Volume:28 | Issue:4 (112) Page(s): 27-54

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Information Journal Paper

Title

ADVERSE SELECTION IN LIFE INSURANCE

Author(s)

MOHAMMADI MAHDI | Issue Writer Certificate

Keywords

LIFE INSURANCEQ2

RISK INDEXQ2

ADVERSE SELECTIONQ2

Abstract

Competition in insurance industry, due to the expansion of insurance demand in all its fields, especially in LIFE INSURANCE, has highlighted the significance of information distribution. Therefore, it is important to consider issues such as ADVERSE SELECTION, in order to prevent low pricing and insurer's bankruptcy risks. We have used LIFE INSURANCE data of an insurance company to test this phenomenon. According to the Rothschild-Stiglitz theory of separating equilibrium, high risk policyholders demand full coverage with fair premiums while low risk policyholders demand partial coverage with lower (and fair) premiums. As a result of this, using EVeiws software and the reduction in LIFE INSURANCE full coverage (decrease in death benefit) we have identified that different variables affect the level of policyholder's risk (death risk) which is intuitive.Finally, we calculate a RISK INDEX using statistically significant variables (which show increasing and decreasing risk levels for policyholders with positive and negative signs). The significance of annual premium and LIFE INSURANCE demand as an index of ADVERSE SELECTION is also estimated. Thus the hypothesis of ADVERSE SELECTION is not rejected.

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APA: Copy

MOHAMMADI, MAHDI. (2014). ADVERSE SELECTION IN LIFE INSURANCE. IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH), 28(4 (112)), 27-54. SID. https://sid.ir/paper/100949/en

Vancouver: Copy

MOHAMMADI MAHDI. ADVERSE SELECTION IN LIFE INSURANCE. IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH)[Internet]. 2014;28(4 (112)):27-54. Available from: https://sid.ir/paper/100949/en

IEEE: Copy

MAHDI MOHAMMADI, “ADVERSE SELECTION IN LIFE INSURANCE,” IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH), vol. 28, no. 4 (112), pp. 27–54, 2014, [Online]. Available: https://sid.ir/paper/100949/en

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